As business leaders look to stabilise their balance sheets, cost-cutting and restructuring is occurring right across the board. According to a recent study by Mercer Marsh Benefits, a leading global provider of employee health and benefits services and solutions, over 84% of employers are looking closely at the viability of their health-related benefit schemes, an unsurprising statistic given the escalating price of health insurance.

An aging population, government welfare reforms, and a spate of mental and physical health epidemics means cost inflation today stands at twice the rate of general inflation.

With governments also withdrawing from many of their core functions, employees and their employers have become increasingly encumbered by the cost of healthcare. Not only is the workforce feeling the weight of potential joblessness, but many of the services designed to mitigate that stress have been, or are being, removed. There is, however, determination among business leaders to maintain, and in many cases invest in, new health-related programmes for their staff.

"From the work that we've done and the surveys we've undertaken over the past two years, we see that healthcare is an area where employers are very reluctant to cost cut," says Stephen Clements, a partner at Mercer Marsh Benefits. "Obviously our clients are looking to mitigate their exposure to inflation and creatively contain costs, but they're not trying to remove their schemes."

That resolve reflects an appreciation in the industry that the way employees feel, both mentally and physically, can profoundly influence the way they behave in the workplace. This may seem trivial, but finding the appropriate information that confirms the link between health and productivity isn't easy. As a data-driven consultancy firm specialising in health management, Mercer Marsh Benefits does exactly that.

"Data really is so important," says Dr Wolfgang Seidl, head of health management at Mercer Marsh Benefits. "Any organisation that wants to embark on a healthcare journey must be clear exactly what it wants to measure and how before designing the service. If you want to do data-driven health management and if you want to convince the board that wellness is not a fluffy concept, this is hugely important. Our clients are rational decision-makers, who will want the emotional argument to be supported by figures. At Mercer Marsh Benefits, we spend a lot of time trying to measure these things, analysing data, trends and causes."

A healthy return on investment

Most of that data points towards two ways that health can affect performance. Perhaps the most obvious is absenteeism. In 2008, a report by Dame Carol Black on Britain's working-age population calculated the cost to UK industry of sick leave due to mental ill health to be around £8.4 billion, a startling figure for a country in recession.

But that number was dwarfed by the second factor, presenteeism, the act of attending work while sick. Black estimated the cost to business from mental ill health alone to be in excess of £15 billion each year.

Perhaps the most striking aspect of Black's report was the sheer size of the proportion of the UK labour force that was considered in some way or other to be mentally ill. Almost a third of the working population is thought to suffer from symptoms of mental distress of which around half warrant a mental health diagnosis. The ailments may differ in other parts of the world but the underlying outcome is essentially the same: productivity loss. For Seidl, the solution is obvious.

"Some employers may not be persuaded by the business case for investing in health, but it's incredibly important that we look at wellness and preventative healthcare in order to create a workforce that is properly functioning," he says. "The return-on-investment (ROI) variables are vast: absenteeism, staff turnover, talent attraction, employee engagement, litigation, compliance costs and so forth. All these variables can be measured to show clients just how crucial the business case is. We believe that healthcare is a tool to motivate and engage staff, and create loyalty, brand value and retention."

Another interesting aspect of Black's report was the idea that, because joblessness is so demoralising, getting people back to work may be medically more useful than passively catering for a prolonged absence. Two recent studies into the link between unemployment and well-being confirm at least part of that idea. In 'Changing identity: retiring from unemployment', Clements Hetschko and Andreas Knabe explore the way stigmatisation can damage the health of the unemployed. Another article, 'Back to Baseline in Britain' by Andrew Clark and Yannis Georgellis, argues that not only does unemployment damage well-being, but also that the inability of the jobless to adapt to their circumstances makes lengthy periods of joblessness the cause of great unhappiness.

"Scientific research suggests that joblessness can make people depressed," says Clements, "and even once you go back into the workplace there are studies that show that the emotional scar endures. That also applies to long-term absentees. The evidence we've looked at suggests that if you're not able to get back after a few months, then your chances of success are reduced exponentially. That's why it's so important to make an early intervention and provide managers with the skills recognised to achieve this."

Managing the problem

Employers that do recognise the way absence and unemployment affect well-being must also realise that reintroducing obviously ill employees to the same level of work may not be the most rational course of action. Allowing them to 'flexibly adjust' to the workplace environment over a reasonable period of time is, according to Clements and Seidl, the most sensible option. Unfortunately, for many managers who lack the requisite training, recognising and addressing mental health issues and other productivity issues at the workplace is not an easy task.

"Managers don't want to address mental health issues because they haven't been properly trained," Seidl says. "We need to make managers comfortable speaking with their colleagues and exercising their duty of care with the right training in empathy skills."

One way to give the issue the attention it deserves, according to Seidl, is to ensure the full involvement of CEOs and senior management. On top of the sudden retrenchment of state welfare, the rising level of health epidemics like cardio-vascular disease, diabetes, dementia and cancer has reinforced the need for employers to either expand or restructure their current systems. C-suite executives need to mobilise in order to make these decisions as quickly and effectively as possible.

"There is a lot of anecdotal evidence that wellness programmes work much better when there's CEO and board-level commitment," Seidl says. "If you introduce a wellness programme, companies can either pay lip-service, in which case, employees are unsure about what they are supposed to do, or the CEO can give out a message of support."

It's an assessment that Clements agrees with: "For me it's essential that the C-suite want to invest in health for the right reasons. Unless you've got buy-in from the top you're not going to be able to support the investments needed to create a culture of health. The first opportunity to cut costs will be jumped on and you'll end up with an ineffective transactional approach to healthcare that looks at nothing but the ROI on the individual elements rather than the value created by a holistic approach."

Accelerating change

CEOs of multinational companies who do take charge of their healthcare benefits will need to contend with another layer of complexity. As with most things, globalisation has profoundly affected the way healthcare programmes can be delivered across borders. The obligations that employers have to their employees' well-being vary from country to country, and these differences can impact on the provision of an orchestrated, global framework.

"A large number of our clients are multinationals so we have a lot of experience in this area," explains Seidl. "Obviously, the obligations on occupational health vary across different geographies and we have to bear that in mind. We're working very strongly with a new tool called the Global Health Accelerator, which was launched last year as an international platform combined with face-to-face consulting. It helps establish what's in place in different countries and how to prioritise those countries, which is important if you're a multinational."

Clements agrees: "All the evidence from the projects that we've worked on with multinational employers indicates the importance of having an over-arching framework to facilitate consistency of governance," he adds. "At the same time it's important to adapt the on-the-ground provision and intervention to target the priorities of that particular country and the needs of that specific location."

The complications involved in the provision of employee health benefits are unlikely to diminish any time soon. With working populations getting older, welfare states receding and a series of health crises coming to the fore, evidence-based health management has become indispensible for corporates across the world.